Pricing Your Home for Sale – Interesting Studies

Posted by Jim Kimmons, Broker/Owner • March 7, 2008 • Printer-friendly

The Taos real estate market is unique in many ways. However, human nature is much the same no matter where you are. In pricing a home for sale, there have been some interesting studies that might bear consideration.

A Cornell University study showed that people would pay more for a home if listed at a price that did not end in several zeros. In other words, $449,565 would ultimately fetch a higher price than $450,000. This came from lab tests of 134 graduate students, as well as examination of 27,000 real estate transactions.

It has long been the practice of many Realtors to suggest a price just below a major price break point. If the home is set to list at $500,000, then something a few hundred dollars below that would expose it to more potential buyers. Now we might want to take that farther with a price that ends in a more precise set of digits, say $499,622. Arbitrary, but these studies suggest that people view a more precise number as having come from more precise calculations. This could lead to less bargaining. Just an idea. Oh, they also found that prices ending in a nine or nines didn't work as well.

Let's complicate the decision a bit more. But, this is my top pick for pricing strategies. Let's look at how people tell their real estate agents their price range of interest, and how the agent does the search:

We're looking in the $350,000 to $42,000 price range
Real estate broker puts in search criteria of low $350,000 to high of $425,000
Even if agent is more imaginative, they use $325,000 and $450,000 to catch close listings

Now, here's the reason to go with these even numbers. If agents are entering $350,000 at the low end, a list price of $349,922 won't even come up. Since we have two groups of potential buyers, one with a top end of $350k, and the other with a low end of $350k, then listing at precisely $350k will get your listing in front of all of them.